Sometime in the next 10 days, you should expect Gov. Bill Walker to veto all or part of the funding for your Alaska Permanent Fund Dividend.
We’re warning you ahead of time. We want you to get used to the idea, and we want you to understand why it’s the right thing to do.
Thanks to the inaction of the Alaska Legislature, Walker’s veto pen is the last chance to put Alaska on a sustainable fiscal path, and ultimately save the Dividend.
The fourth special session of the 29th Alaska Legislature concluded Sunday. It was mostly a waste of time and money. While some important bills were passed, none included the actions we believe are necessary to fix Alaska’s multibillion-dollar budget deficit.
Above all else, the Legislature failed to pass Senate Bill 128, which uses 5.25 percent of the Alaska Permanent Fund to fund state services and pay dividends on a sustainable, affordable basis.
On average, the Permanent Fund is expected to earn 7 percent per year from its investments. Subtract the rate of inflation, and 5.25 percent is a reasonable amount to spend. It’s enough to cut the deficit by more than half, but it’s not so much that it encourages overspending.
Despite the sensibility of this idea, lawmakers in the House rejected it because of the idea’s effects on the Dividend. Under this idea, the Dividend would be $1,000 instead of the $2,000 it is expected to be.
But cutting the Dividend right now is necessary to preserve it for the future. Without a cut to the dividend, we risk having no Dividend at all in four years. The state is spending its savings so quickly that unless we cut back, we will have no money to pay the Dividend beyond the end of this decade.
A project begun in 1982 will die from starvation before its 40th birthday.
This is not a choice about cutting the Dividend. This is about how much to cut the Dividend. You can either lose half now or lose the entire thing in a few years.
Many lawmakers said their constituents told them to leave the Dividend alone. If that is true, these lawmakers failed to educate their constituents about what truly is at stake, or how dividends might go away entirely if action isn’t taken.
Now it’s up to Gov. Walker to save us.
This year’s budget contains $1.4 billion for dividends, enough to pay every man, woman and child in Alaska about $2,000.
If Walker vetoes that money, there would be no dividends. When it convenes in special session on July 11, the Legislature would be forced to act.
In the special session that just ended, the House failed to pass SB 128 because it feared cutting the Dividend. If Walker vetoes the Dividend, lawmakers will have an opportunity to save it by passing SB 128.
There’s no question that if Walker vetoes the Dividend, it will infuriate Alaskans. Good. Maybe then they’ll pay attention to the real issue here.
If you’re reading this newspaper, you know the real issues. You’re up-to-date on the Legislature and what it’s been doing (or not doing). The problem lies with the people who don’t read the state’s newspapers. They live with blinders, ignorant of the problems on the ground. If you don’t believe us just look at comments below news articles and on social media. It becomes clear many Alaskans don’t understand how the Permanent Fund will be impacted once all the state’s savings are gone.
Walker might be the only Alaska politician brave enough to tear off their blinders in a spectacular act of political suicide. Walker has said repeatedly he’s less concerned about winning reelection than doing what’s necessary. So far, he’s kept his word. His plan for new taxes left no one unscathed.
According to the Alaska Attorney General’s Office, it’s within the governor’s right to veto a portion, or all, of the dividends to Alaskans. As we said in a previous editorial, the Permanent Fund is the third rail of Alaska politics: Touch it and die. But if something isn’t done to shore up the budget deficit and increase revenue now, we’re just trading electrocution for starvation.
Walker and the leadership of the Senate know this. So do some members of the House. The rest are either trying to protect their chances at reelection or are living in fantasy world where oil prices will soar and never again sink.
If the governor were to veto money budgeted for PFDs, it would make the Legislature’s vote on SB 128 much easier. Many Alaskans would even view them as heroes for protecting the Dividend.
In reality, the real hero tends to be the person who sacrifices the most for the good of all.
Alaska needs that hero now.
